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Fulton-Green v. Accolade, Inc.

United States District Court, E.D. Pennsylvania

September 23, 2019

TASHICA FULTON-GREEN and DANIEL CREVAK, on behalf of themselves and all others similarly situated, Plaintiffs
v.
ACCOLADE, INC., Defendant

          MEMORANDUM

          GENE E.K. PRATTER, UNITED STATES DISTRICT JUDGE.

         This case stems from a data breach that resulted when an Accolade employee released all of the W-2s for its U.S.-based employees to a cybercriminal. After negotiations and mediation, the parties entered into a settlement agreement, filed a motion for final approval, and Class Counsel filed an unopposed motion for attorneys' fees. Because the settlement is fair, reasonable, and adequate, the Court grants the parties' motion for final approval. Because the proposed attorneys' fees are reasonable, the Court grants Class Counsel's motion for attorneys' fees.

         BACKGROUND

         In January 2017, Accolade, Inc. was the target of a "phishing" scheme."[1] A cybercriminal requested the W-2s for current and former U.S.-based Accolade employees from an Accolade employee who then sent the unencrypted files via email. The W-2s included personally identifying information (PII) such as employees' names, addresses, Social Security Numbers, salaries, and taxes withheld for 2016. Tashica Fulton-Green's and Daniel Crevak's PII was included in the breach. They filed suit against Accolade on behalf of themselves and all others similarly situated alleging negligence, negligence per se, breach of implied contract, and breach of fiduciary duty.

         The parties entered into a settlement agreement following negotiations and a private mediation overseen by Rodney A. Max of Upchurch Watson White & Max. The parties agreed to settle this action, pursuant to the terms of their settlement agreement, and subject to the approval and determination of the Court as to the fairness, reasonableness, and adequacy of the settlement. Final approval of the settlement will result in dismissal of this action with prejudice. Per the terms of the preliminary settlement approval, the parties filed a motion for final approval and Class Counsel filed an unopposed motion for attorneys' fees.

         The notice deadline regarding this class settlement was 30 days after preliminary approval, which was docketed on January 24, 2019. The claims deadline is February 17, 2020; however, the opt-out/objection deadline was May 23, 2018. No. one filed an opt-out or objection despite the fact that the notice program reached 98.8% of class members.

         I. Class Definition

         The settlement class consists of:

All current and former Accolade employees whose W-2 data was compromised as a result of the Data Disclosure which occurred on or about January 17, 2017.

         II. Settlement Terms

         Under the settlement, all class members are entitled to enroll in identity theft protection for 24 months through Experian's ProtectMyID service. Class members who have already enrolled in the program will be instructed on how to enroll for an additional 24 months. Class members are also entitled to seek reimbursement for four claim categories (A-D), with an overall cap of $1, 500 paid to each class member. However, participants must have spent at least one full hour dealing with the theft of their PII before they can claim any lost time. The treatment of each claim category is set out as follows:

         Claim Category A:

         Class members who had a false tax return filed after January 16, 2017 are eligible for a basic payment of $75. They must provide proof of the false tax return, attest that they have no knowledge of a false return being filed in the previous three years, submit a self-verifying statement for time spent dealing with the effects of the breach, and submit documentation of recovery. Accolade will reimburse claimants at $25 per hour spent dealing with the effects of a false tax return. There is a maximum recovery of $275 per claimant for claims made pursuant to Claim Category A.

         Claim Category B:

         Class members who had an Internal Revenue Service (IRS) tax transcript requested using their PII after January 16, 2017 and submitted an identity theft affidavit to the IRS are eligible for payment of $75. They must provide proof of the issuance of a tax transcript by the IRS and submission of an identity theft affidavit, attest that they have no knowledge of an IRS transcript being fraudulently requested using their PII in the previous three years, and submit a self-verifying statement for time spent dealing with the effects of the breach. Accolade will reimburse Category B claimants at $25 per hour spent dealing with the effects of having their IRS tax transcript requested using their PII. There is a maximum per claimant recovery of $125 for claims made pursuant to Claim Category B.

         Claim Category C:

         Class members who experienced incidents of identity theft or financial fraud (other than those covered by Categories A and B) after January 16, 2017 are eligible for payment of $75. This includes the opening of new bank accounts, credit applications, FAFSA applications, etc. It does not include fraud on existing credit cards. These Category C class members must provide proof of fraudulent activity or details of such activity and why proof does not exist, attest that they have no knowledge of identity theft (other than fraudulent credit card activity) filed in the previous three years, and submit a self-verifying statement for time spent dealing with the effects of the breach. Accolade will reimburse claimants at $25 per hour spent dealing with the effects of identity theft. There is a maximum per claimant recovery of $275 for claims made pursuant to Claim Category C.

         Claim Category D:

         Class members who claim they suffered out of pocket expenses (other than those covered in categories A, B, or C) as a result of the data disclosure are entitled to reimbursement of such amount. They must submit reasonable documentation supporting their claim for expenses, proof of fraudulent activity or details of such activity or why proof does not exist, include a detailed explanation of the activities related to the data disclosure that the claimant spent time on, and submit a self-verifying statement for time spent dealing with the effects of the breach. Accolade will reimburse claimants at $25 per hour spent for up to 3 hours for claims made pursuant to Claim Category D. Claimants are not entitled to reimbursement of expenses that have already been reimbursed through Experian or any other source.

         Injunctive Relief:

         The settlement agreement also provides for injunctive relief which includes undertaking and maintaining the following cybersecurity measures for two years: cybersecurity awareness and training program, training employees on new policies for handling PII, implementing and operating systems to help detect and filter phishing attempts, restricting access to tax and payroll information, random testing of policies, and access control review.

         Claims Administration:

         The preliminary settlement approval appointed Epiq to administer the claims in the order they are received. To make a claim, a Settlement Class Member must submit a valid, timely, and sworn Claim Form by the deadline of February 17, 2020. Class members have 30 days from the date of a written notice to cure any deficiencies in their claim forms.

         III. Class Member Response

         After the Court granted preliminary approval in January 2019, the Settlement Administrator mailed 937 Notices via First Class Mail to all Settlement Class Members. According to the parties, the Notice Program reached 98.8% (or 925 out of 937) of the Settlement Class. The parties also set up a neutral website, which includes the Complaint, Long Form Notice, Settlement Agreement, Order Granting Preliminary Approval, paper Claim Form, and a frequently asked questions page. An automated phone number that is available 24/7 has fielded 63 calls representing 491 minutes of use and live agents have also handled 33 inbound calls representing 428 minutes of use and 28 outbound calls representing 62 minutes of use.

         The parties contend that the class member response has been positive. The deadline to request exclusion forms was May 23, 2019 and no one has requested to be excluded or filed an objection. CAFA notice was provided to the United States and applicable state Attorneys General, none of whom have raised concerns. Sixteen claims have been submitted thus far, and Class Counsel expect up to 28 claims in total.

         DISCUSSION

         The Court held a preliminary approval hearing on January 9, 2019 and granted preliminary approval on January 24. In accordance with the deadlines set out in this Court's preliminary approval order, the parties moved for final approval and filed a motion for attorneys' fees on June 24. The Court subsequently held a final approval hearing on July 24. For the reasons outlined in this Memorandum, the Court grants final approval of the class settlement and awards attorneys' fees of $300, 000, $5, 000 for reimbursement of reasonable costs and expenses, and $1, 000 service awards for both of the class representatives.

         I. Motion for Final Approval

         A. Class Certification

         Where, as here, the Court has not already certified a class prior to evaluating a settlement, the Court initially must determine whether the proposed settlement classes satisfy the requirements of Federal Rule of Civil Procedure 23(a) and (b). See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 619 (1997); see also In re Pet Food Prods. Liab. Litig., 629 F.3d 333, 341 (3d Cir. 2010) ("[A] district court first must determine that the requirements for class certification under Rule 23(a) and (b) are met."). The Third Circuit Court of Appeals summarized the demands of Rule 23 as follows:

Rule 23(a) contains four threshold requirements, which every putative class must satisfy:
(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.
Fed. R. Civ. P. 23(a); see also Amchem, 521 U.S. at 613. Upon finding each of these prerequisites satisfied, a district court must then determine that the proposed class fits within one of the categories of class actions enumerated in Rule 23(b). ..
[Certification pursuant to Rule 23(b)(3) seeking monetary compensation is permitted where (1) "questions of law or fact common to class members predominate over any questions affecting only individual members, " and (2) "a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed.R.Civ.P. 23(b)(3); see Collins v. E.I. DuPont de Nemours & Co., 34 F.3d 172, 180 (3d Cir. 1994). These twin requirements are commonly referred to as predominance and superiority.

Sullivan v. DB Invs., Inc., 667 F.3d 273, 296 (3d Cir. 2011) (en banc).

         The '"[f]actual determinations necessary to make Rule 23 findings must be made by a preponderance of the evidence. In other words, to certify a class the district court must find that the evidence more likely than not establishes each fact necessary to meet the requirements of Rule 23."' In re Ins. Brokerage Antitrust Litig,, 579 F.3d 241, 257-58 (3d Cir. 2009) (quoting In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 320 (3d Cir. 2008)).

         1. Numerosity

         Under Federal Rule of Civil Procedure 23(a), the first factor to consider in certifying a class is whether "the class is so numerous that joinder of all members is impracticable." The plaintiffs "need not precisely enumerate the potential size of the proposed class, nor [are] plaintiff[s] required to demonstrate that joinder would be impossible." Cannon v. Cherry Hill Toyota, Inc., 184 F.R.D. 540, 543 (D.N.J. 1999) (citation omitted); see also 7A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1762 (3d ed. 2005) ("'[I]mpracticable' does not mean 'impossible.' The representatives only need to show that it is extremely difficult or inconvenient to join all the members of the class."); 1 A. Conte & H. Newberg, Class Actions § 3:14 (5 th ed. 2011) ("Plaintiffs bear the burden of demonstrating that joinder is impracticable, but impracticable does not mean impossible.'"). "[G]enerally if the named plaintiff demonstrates that the potential number of plaintiffs exceeds 40, the first prong of Rule 23(a) has been met." Stewart v. Abraham, 275 F.3d 220, 226-27 (3d Cir. 2001) (citation omitted). Because there are hundreds of class members, this factor is easily met.

         2. Commonality

         Under Federal Rule of Civil Procedure 23(a), the second factor to consider in certifying a class is whether "there are questions of law or fact common to the class." The commonality prerequisite does not require that all members of the prospective class share identical claims. Hassine v. Jeffes,846 F.2d 169, 176-77 (3d Cir. 1988) (relying on Eisenberg v. Gagnon,766 F.2d 770, 786 (3d Cir. 1985)). Rather, "[t]he commonality requirement will be satisfied if the named plaintiffs share at least one question of fact or law with the grievances of the prospective class." Baby Neal v. Casey,43 F.3d 48, 56 (3d Cir. 1994). As the Supreme Court explained: '"What matters to class certification ... is not the raising of common "questions"-even in droves-but, rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation. Dissimilarities within the proposed class are what have the potential to impede the generation of common answers.'" Wal-Mart Stores, Inc. v. Dukes,131 S.Ct. 2541, 2551 (2011) (quoting Richard A. Nagareda, Class Certification in the Age of Aggregate Proof, 84 N.Y.U. L. Rev. 97, 132 (2009)) (emphasis in original). Here, there ...


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